UK would cut tariffs, have no checks on Irish border in no-deal Brexit

LONDON (Reuters) - Britain said it would eliminate import tariffs on a wide range of goods and keep the border between Ireland and Northern Ireland free of customs checks if it leaves the European Union without a transition deal.

The government announced the temporary measures, which it hopes would soften the immediate impact of a no-deal Brexit, as lawmakers prepared to vote on Wednesday on whether Britain should leave the EU without any transition agreement.

That prospect is alarming many employers as the March 29 departure date looms large. The government’s no-deal tariff plan, which would last for up to 12 months, would seek to keep prices down for consumers while also minimizing job losses among manufacturers in the world’s fifth-biggest economy.

Eighty-seven percent of total imports to the United Kingdom by value would be eligible for tariff-free access, up from 80 percent now.

Some protections for British producers would remain in place, including for carmakers — who are major employers in Britain — and beef, lamb, pork, poultry and dairy farmers.

Aluminum, steel, machinery, arms and ammunition, footwear, paper and wood products would be exempt from tariffs.

The plan would expose many manufacturers to cheaper competition from abroad. A group representing farmers said it was concerned that eggs, cereals, fruit and vegetables would also not be protected by tariffs.

If maintained, the plan could make it harder Britain to extract concessions from other countries in future trade talks.

LITTLE CONSOLATION

Cutting tariffs on imported goods would ease the hit to British consumers from an expected jump in inflation in the event of a no-deal Brexit which would probably cause sterling to tumble and make imports more expensive.

However, the price of cars and food imported from the EU could rise because the new plan would introduce tariffs.

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The head of a British carmakers industry group said the protections offered — which included no tariffs on parts imported from the EU — would not resolve the “devastating effect” of a no-deal Brexit.

“No policy on tariffs can come close to compensating for the disruption, cost and job losses that would result,” said Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders.

“It’s staggering that we are in this position with only days until we are due to leave.”

“MODEST LIBERALIZATION”

May says she wants to avoid a no-deal Brexit. Her finance minister Philip Hammond is set to offer lawmakers an incentive to reverse their opposition to her plan by promising later on Wednesday to free up billions of pounds in extra public spending or tax cuts if a no-deal Brexit is avoided.

Trade minister Liam Fox has invited business leaders to join a call at 1500 GMT to discuss tariffs and Brexit, a senior company source said.

Brexit minister Stephen Barclay called the measures a “modest liberalization”.

“It is a temporary measure, this is for a short term while we engage with business and we see what the real term consequences are,” he told BBC radio.

The new system would mean 82 percent of imports from the EU would be tariff-free, down from all of them now, while 92 percent of imports from the rest of the world would pay no duties at the border, up from 56 percent now.

IRISH BORDER

The government said it would not introduce checks or controls on goods moving from the Irish Republic to the British province of Northern Ireland.

FILE PHOTO: A Guinness truck passes a sign for Customs and Excise on a road near the border with Ireland near Kileen, Northern Ireland, October 17, 2018. REUTERS/Clodagh Kilcoyne/File Photo

“The measures announced today recognize the unique circumstances of Northern Ireland,” Karen Bradley, Britain’s secretary of state for Northern Ireland said in a statement. “These arrangements can only be temporary and short-term.”

Britain, Ireland and the EU have said they want to avoid physical checks on the border, which was marked by military checkpoints before a 1998 peace deal ended three decades of violence in the region. But they disagree on the “backstop”, or insurance mechanism, to exclude such border checks.

Goods crossing the border from Ireland into Northern Ireland would not be covered by the new import tariff regime, posing a challenge for British authorities to stop importers from using Northern Ireland as a backdoor route to avoid British tariffs.